Digital Assets Estate Planning

Your digital footprint is constantly expanding, and the internet is rapidly becoming an avenue through which you conduct your daily transactions. You grow your digital holding whenever you send an email, open an online account, take photos, or write blog posts. Imagine what would occur to these digital assets when you can no longer navigate the digital world due to death or incapacity. Will your loved ones know about your digital wealth and access it? Can they manage it according to your wishes and objectives?

Arnold Law, a seasoned Florida probate and estate planning law firm, can help you prepare a roadmap for your relatives and appointed fiduciaries to follow. We can also help prevent identity theft and losses to your estate and avoid unexpected costs.

Defining Digital Assets

A digital asset is an electronic record in which a person has an interest or right. The term does not include your underlying property or liability unless the liability or asset is itself an electronic record.

You could wish your fiduciaries or family members to finally inherit your home or other valuables. Still, with modern life increasingly lived online, it is possible to overlook digital assets. The heirs might only access the digital properties if you account for them properly. In other words, your heirs might not receive the money you would like them to inherit, your social media account could remain logged in long following your demise, and your loved ones could lose your family videos and photos. With more individuals living online, you need to understand your digital assets and account for them in the estate plan execution and preparation.

On top of social media and email accounts, other digital assets include:

  • Cryptocurrencies like bitcoin and ether

  • Website domain names

  • Digital videos and photo sharing and storage accounts

  • Digital entitlements to musical composition, theatrical works, motion pictures, or literary

  • Accounts in online betting accounts

  • Blog content

  • Online gaming avatars that provide online services or goods that can be worth real-world money

  • Online video channel that is monetized and gives its owner advertising revenue streams

  • Subscription services

  • Online banking accounts

  • Ecommerce or marketplace accounts like eBay and Amazon

  • Utility accounts

  • Shopping accounts

  • Online chatroom accounts

  • Loyalty program benefits (credit card perks and frequent flier miles)

  • Contact lists

  • Smartphone, tablet, computer, or cloud data

Please note that while your online financial platforms and accounts are digital assets, the money in them is not.

Who is a Fiduciary?

A fiduciary is a person that falls into either of the following categories, depending on the circumstances:

  • An executor (personal representative) of an estate of a decedent digital asset owner

  • An agent acting under a Power of attorney (POA)

  • A legal guardian of an asset of a minor child or incapacitated person

  • A trustee

Please note that your friends and family members only have automatic rights to access digital properties if they are fiduciaries.

Some of the responsibilities of a fiduciary include the following:

  • The duty to be loyal The fiduciary should act in the digital asset owner’s best interests. The trustee should not use trust property for their benefit, even when the beneficiaries are unaffected.

  • Duty of care The fiduciary should manage the property entrusted to them with the care that a prudent individual would exercise when handling their assets.

Why You Should Include Digital Properties in the Estate Plan

Digital assets cause headaches to estate executors, given privacy issues and concerns. One executor’s duty is tracking down the decedent’s property. Unfortunately, digital assets do not have a paper trail and can only be known to the deceased. And even if loved ones know about the asset, they might know how to access them. Finding unidentified passwords or persuading website administrators to replace them can be frustrating.

It is unlawful for websites to disclose personal details to a third party without the permission of the individual to whom these details relate. Understandably avoiding potential liabilities, most websites have stringent protocols against disclosure, necessitating a court order before providing the credentials or permitting access to the accounts. Even after locating the decedent’s passwords, the loved one could not use them without written consent, owing to the law against unauthorized access to information. If you, the account owner, document consent, websites will adhere to your estate executor or heir’s request.

One challenge digital assets raise in probate is that heirs need to be well-versed with the digital property as they are with traditional assets like bank accounts and real estate. If you have a valuable digital asset like a Bitcoin wallet that nobody knows about, your heirs will not benefit after your demise. To ensure the smooth administration of your asset, you need a well-crafted estate plan that identifies all your digital assets.

As with traditional assets, some digital properties do not have apparent economic value but have good sentimental value to justify separate treatment within an estate plan. For example, in cloud-based storage, family documents, photos, or documents and email archives might not have market value but be significantly essential to your loved ones.

Challenges With Digital Access

Digital assets are like any other property; you can pass them on to a designated party through an estate plan. However, digital assets laws are still developing so are search engines and social media practices. Consequently, accessing digital wealth and digitally encoded financial details presents challenges to anyone apart from the owner. Here are common challenges faced by the loved one of a decedent person when accessing the deceased digital assets:

  • Passwords If your loved ones do not have your keys, passwords, or requisite access information, they cannot access property or details stored in online accounts, the cloud, phones, or computers. While some passwords are simple for an expert to locate, others are hard to bypass or even impossible. For instance, losing a private key or password to the digital wallet means losing access to the crypto wallet for good due to the absence of central customer care.

  • Data encryption Your digitally stored information can be encrypted, improving security. Encryption can keep the details in a given location so thoroughly, making it hard for anyone without a password to decode. For instance, your loved one cannot access personal data, content, or memories stored in a phone or the cloud that has not been transferred elsewhere if they do not know your password.

  • Criminal law Both federal and state laws ban illegal access to personal data and computer systems. The regulations aim to protect users against identity theft and fraud. However, they can create an insurmountable obstacle for a relative trying to access the digital properties of your deceased relative. The laws are evolving to stay afront with the changing world, but there are still gray areas. Consequently, it is wise to ensure the estate plan provides the fiduciaries with the required authorization.

  • Data privacy restrictions and laws Laws make it illegal for an online account service provider to give any person other than you access to the content of electronic communications without your consent. In other words, companies, including social media platforms, can conceal your data unless you consent. Accessing a deceased individual’s digital account without a legal account can result in court battles with online account companies, which can be costly.

  • Time Some service providers delete digital properties after a while without use. You should renew your website domain names annually, while virtual currency can lose value if unclaimed.

Preparing and Planning Your Digital Estate

You can evade challenges to digital access by addressing your digital information and property in the estate plan. Planning helps you gain access to digital property and reduce administration costs. It also ensures that your significant or valuable digital assets are identified.

Please consider taking these steps:

  1. Take an Inventory of the Digital Wealth

To include all your digital properties in the estate plan, ensure you list every digital asset. Include all essential passwords, digital property, and online accounts. Store the inventory safely and ensure your loved ones know how and where to access it.

To reduce the possibility of identity theft, avoid digitally storing passwords and keys for cryptocurrencies. When hackers hack into brokerage or bank accounts, the institutions might have insurance protection. However, if a person hacks into your crypto wallet, there will be no remedy for receiving a refund. Therefore, be cautious about where you store the crypto passwords.

For your non-crypto asset, consider pocket-friendly password management software like LastPass and 1Password.

Finally, avoid including your passwords and usernames in your will since it becomes a public document after your demise. Record them separately and ensure your executor can find them.

  1. Determine How You Wish Your Digital Property to be Managed

There are numerous factors to consider when determining how you want your loved ones to handle the digital wealth upon your demise. When considering the possibilities, do not forget the role of custodial tools and different service providers’ agreements and policies in what occurs to the digital estate once you die.

Since the company administering your digital account might have terms and policies, you should consider these details before leaving directives on how you want the wealth to be managed. For instance, you cannot transfer some assets based on the conditions you agreed to when creating your digital account. Companies like Twitter and Google have legacy guidelines stipulating what occurs to your online account after death. For instance, Facebook permits the deceased’s loved one to memorialize the account, allowing the users to view photos and post messages. 

Also, ensure you check the sites you use for custodial tools. A custodial tool allows you to approve a person to access the digital account after your death. For instance, Google can help you to convey your wish on who can access the Google property when you pass away.

If you have income-generating digital accounts, consider if you want a loved one to continue running your account to shut it down.

If you run a YouTube channel or blog, would you want it removed or remain up after your demise?

You could wish for a loved one to make final posts to the audience. Specify what you like to occur to all accounts and decide who will execute your wishes.

  1. Selecting Your Digital Executor

Your digital executor is an individual tasked with managing your digital asset once you are gone. You should select this person wisely, ensuring they can execute the essential duties and are trustworthy.

While your estate’s executor can be the digital executor, selecting two individuals to fulfill the roles is wise. Additionally, your conventional estate executor might be uncomfortable or unacquainted with digital assets.

Ensure you have conversations with the digital executor. While being a digital executor is not a lawful binding designation, ensure they understand their role. Let them know how to find crucial information to access digital accounts/assets.

If you pick two different persons to function as executors of the digital property and traditional estate, you should instruct them to collaborate. The digital executor should help the estate executor with your assets’ digital aspect. Remember to reference the digital will in the conventional will and specify who is your digital executor.

  1. Store the Digital Estate Plan Document Safely

If the digital asset executor cannot find the detail you left behind, it will be difficult for them to execute your wishes. Therefore, store the estate plan files and documents in an accessible and safe place. It can be in your house safe alongside other legal files.

You can also leave the estate planning document with your lawyer. Your attorney should include language giving legal consent for providers to divulge the content of electronic communications to the relevant people. You can also consider which information to make accessible to the fiduciaries.

Who to Notify About Your Estate Plan

The most exciting thing about estate plan documents is that you can keep them private during your lifetime. However, it is unwise. If you believe that loved ones can object to your will’s terms and pressure you to amend your decisions, you can keep the details a secret.

However, you should notify those who will play significant roles in the plan administration after your demise. Please also provide them with copies of the relevant documents. Most people give copies to their estate planning lawyers, spouses, or closest relatives.

Finally, remember to revisit the estate plan and rewrite the documents as required to address new life circumstances and changes.

How Federal Laws Protect Digital Property

The Stored Communications Act is one federal law that protects access or limits fiduciaries to digital assets.

The SCA makes it illegal for anyone to purposefully access a facility via which electronic communication services are offered without approval. It is also an offense to deliberately exceed the permission to use the digital asset.

Essentially, the law establishes privacy rights and bans service providers from intentionally exposing the content of files or communications stored, maintained, or carried on the service unless they disclose to the intended recipient, an addressee, or the addressee’s agent. The disclosure should have the originator’s or the addressee’s legal consent.

The privacy protection under SCA does not apply to an email service provider. For instance, a company is not a custodian because it needs to have terms of service agreements with its employees. The term “custodian” means a person that maintains, processes, stores, receives or carries a user’s digital assets. On the other hand, a terms-of-service agreement controls the relationship between the custodian and the user.

The privacy protections are adequate, provided the clients are alive and can control and access their digital wealth. Services providers deem privacy protection as limitations on their capacity to reveal digital asset details to relatives of a deceased person unless there are specific exemptions.

Florida Fiduciary Access to Digital Asset Act (FFADAA)

In 2016, the Florida legislature passed the FFADAA. The act allows the fiduciaries to access the digital properties of the principal, trust, ward, or decedent as if the fiduciaries were the account holders, with restrictions.

Typically, the act aims to do the following:

  • Provide electronic communications and digital assets custodians the lawful authority they require to relate with the fiduciary of their owners while executing the deceased’s privacy expectations

  • Offer the fiduciary the lawful authority to manage electronic communications and digital assets the same way they handle tangible properties.

The act permits users (digital asset owners) to disclose their assets. Also, it sets the order of choice for the owner’s direction. Consequently, the authorized fiduciary becomes a legal user upon the owner’s death under privacy law banning access to the accounts.

Moreover, FFADAA comes with an online tool concept for guiding fiduciary access. Online tools are electronic services given by custodians that let the owners give directions for nondisclosure and disclosure of their digital property to third parties. Recommendations about the disclosure using online tools supersede the rules in a power of attorney (POA), TOSA, trust, or will, and the reverse is true.

FFADAA addresses various forms of fiduciary and how each access electronic communications content and noncontent.

A POA Agent

Regarding the content of electronic communications, the principal should authorize the agent to access their communications. Since the agent has the owner’s consent, federal privacy law should not stop you from administering digital assets.

Guardian of a Ward

It is a crime for a guardian to access the consent of a ward’s electronic communication without the ward’s consent. However, the guardian can access the remaining ward’s digital assets according to a court order or letter of guardianship unless the user or court directs them otherwise. The custodian can request account identification and proof related to the ward’s account. Also, the custodian can terminate or suspend accounts with a reasonable excuse upon the guardian’s request.

A Deceased Person’s Estate Personal Representative

As a personal representative, you cannot access the deceased’s content of electronic communications without the user’s consent or court direction. The law is that you can access all the deceased digital properties except the content of electronic communications. If the deceased person banned disclosure or the court orders otherwise, you are denied access. However, you can request a court order identifying the accounts, finding consent, or finding access is essential for digital estate administration.

A Trustee

A trustee has the title to digital wealth when the trust becomes the user of the asset held by the trust, and the trustee becomes a user of the trustee business.

The custodian should disclose to the trustee who is an original user of a digital asset held by the trust unless there is a court order directing otherwise or it is against the trust terms.

On the other hand, a custodian can disclose to a trustee who is not an original user of the content of electronic communications in an account of the trust if the trust includes permission for the disclosure unless forbidden by:

  • The court,

  • Account owner, or

  • Trust instrument

However, the trustee should provide the custodian with the following:

  • A request for the disclosure

  • A copy of the trust instrument with consent to the disclosure of the content of electronic communication to a trustee

  • The trustee’s certification that a trust exists and they serve as a trustee of the trust

Find a Skilled and Reliable Probate and Estate Planning Attorney Near Me

Technology plays a significant role in everyday life, and if you are like most people in Florida, your digital assets continue to grow. Unless you create clear instructions guiding your relatives on managing the online information, they will not know the appropriate steps to take should you die or become incapacitated. Additionally, the privacy of your digital details is vital. Scammers and identity thefts could wipe out accounts you intended your family to inherit, forever tarnishing what you built for a lifetime. At Arnold Law, you can count on us to help you plan your future and protect your digital wealth. Please contact us at 904-264-3627 to learn more about how we can help you.

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